AIG and me

I’m not sure if I had ever heard of AIG before last fall. When I was getting ready to go to Wales, I decided to get my travel insurance from TravelGuard, which was an AIG company. I bought my insurance, and needed it – I had some difficulty getting to my destination, and the insurance covered all of the extra expenses. (If you’re planning an overseas trip, make SURE that you get travel insurance.)

I got home about the same time that AIG got its first bailout. My first thought was, “What’s going to happen to my insurance coverage?” But nothing happened; I filed my claim, and got my money back very quickly.

I thought about this on Tuesday, when I saw the new AIG chairman/CEO on the Today show. He said that the bailouts that AIG continues to receive are meant to protect the holders of AIG insurance policies – like me. They not only sell travel insurance, but homeowner’s, car, and other kinds. That side of their business is strong, and they’re trying to keep it from being adversely affected by the other side (the toxic securities side) of their business.

That makes sense. I’m not thrilled (that’s a definite understatement) that we’re bailing out all these companies with taxpayer money. We are never going to get out of debt. But if a little of the bailout can protect people who haven’t made any financial mistakes from those who have, then that little bit might be worth it.

2 responses to “AIG and me”

I think the bailouts were not for policy holders like you, really. Your policy is very small potatoes indeed. The AIG bailout money is being poured in to cover AIG’s massive ($100 billion and counting) losses on CDS (Credit Default Swap) policies. With these big investors and companies insure their risks. As these companies and investors unwisely managed their money they are now cashing in. They lose nothing we lose $180 billion.

True. And that’s just one company. I think the point that the CEO was trying to make was that they wanted to protect all of the small potatoes policyholders, which add up to a good chunk of change when they’re all considered together.